By John Kennedy, CFP® / February 8th, 2021
Digital Envelope System – Family Budgeting
Let’s talk about the digital envelope system. It’s 2020, so the old-school envelope-full-of-money system doesn’t really make sense anymore. That system can be put in place digitally though, as Jackie and I have done.
We operate out of two checking accounts, one that our income flows into and pays all of our fixed expenses like our mortgage, childcare, water bill, and more, and another that we transfer money into weekly for our variable expenses like grocery, lunches out, and date nights. This second account is set up with an automated weekly transfer, ensuring we know how much money we have each week and exactly how we are spending our money.
Watching the account go down, rather than a balance go up like you would on a credit card, keeps us more accountable where our purchases are concerned, and watching the weekly balance keeps us more in tune with our spending habits.
How could you split your checking accounts up to create a digital envelope system?